It’s that time of year again when the pumpkin and ghost decorations that adorn shops and marketing materials get switched out for turkey and tinsel faster than you can say Rudolph. With Halloween underway and the holidays just around the corner, retailers are preparing for the influx of holiday shoppers.
The pandemic has been one of the key influencers of retail consumer behavior over the last two years, but as attitudes towards Covid continue to relax, other questions on spending habits take center stage this year.
In this blog, we’ll take a look at some of the most impactful consumer trends this year that are likely to influence purchasing decisions. Don’t be scared! Keep reading to understand this retail consumer behavior this year in order to optimize your strategies for the holidays.
1. Inflation is a concern among shoppers, but not a deterrent
The impact of inflation is one of the most significant financial worries this year, and those concerns are sliding over to retail holiday spending. While the cost of living has gone up along with the cost of supplies for businesses, many brands and retailers are concerned inflation might result in decreased holiday spending this year. However, while spending trends are shifting, that doesn’t seem to be the case. According to a survey conducted by the National Retail Federation, 62% of shoppers still agree that it’s important to keep the status quo when it comes to holidays, meaning spending on gifts as in previous years. Rather than cutting costs on holiday spending, consumers are more likely to hold back on other luxuries, such as travel or eating at restaurants.
It’s good news for brands and retailers that consumers aren’t planning on slowing down their holiday spending. However, as we’ll see in the next consumer behavior trends, inflation does have an overall impact on how and where consumers shop this year as well as their expectations.
2. Shoppers are increasingly relying on alternative payment options
According to a survey by Bluedots on holiday spending habits, 4 out of 10 consumers are planning on using buy now, pay later options when shopping during the holiday season. It’s suggested that this year, shoppers will take on more debt than in previous years, demonstrating the actual financial impact of inflation.
Aside from financing options, consumers are also more likely to sign up for retailer loyalty cards this year in order to take advantage of savings through special sales, point systems, or gift cards. For brands, this presents a good opportunity to incentivize shoppers before the holiday season to sign up for loyalty programs.
With cash flow also being a ‘significant’ challenge for brands, sellers are inclined to utilize next-day payment solutions this season (instead of waiting the traditional 30-90 day pay cycle) to improve efficiencies and liquidity, putting their money back to work fast with next-day payouts. Learn more here –>>
3. Consumers are spreading out where they shop this year
While the last two years saw consumers opt for online shopping over in-store experiences due to the ongoing pandemic, the same survey by Bluedots found that this year, shopping in-store is making a comeback. In fact, 38% of those surveyed said they plan on doing their holiday shopping in a store compared to 36% online.
Another popular avenue for shopping this year is apps, with 75% of consumers expecting to do at least half their holiday shopping on mobile devices. This increase in app usage this year is a win for eCommerce businesses that focus on online sales, meaning it’s more important than ever to have strategies in place to convert online shoppers quickly and efficiently before they shift to another online competitor.
When it comes to shopping for gifts, Google and online search is still the main way people find ideas. When strategizing a digital marketing strategy to convert online shoppers this year, it’s therefore important to focus on paid ads, PPC strategies, and placing in the ad carousel to help capture consumers in the early stages of shopping.
4. Consumers are putting value over loyalty
With inflation as a main concern for nearly all consumers this year, it’s no surprise that shoppers are changing how they make purchasing decisions. According to a McKinsey report, more shoppers this year are making the switch to different brands as compared to the last two years. The driving factor for this change is that shoppers are looking for good value and are more concerned about prices than before. While this behavior was mainly studied for the purchase of essential goods like gas or groceries, we might see similar trends hold for holiday shoppers.
40% of consumers intend to look at new brands this year while holiday shopping, leaving a whole lot of space for new brands on the market to make an impression. This implies to focusing on brand awareness through selling on the right marketplaces and digital channels, providing good value, and creating an efficient order experience early on in the holiday season can prove to be profitable later during the peak shopping season and in the new year as well.
5. Shoppers are aware of potential supply chain challenges
In previous years when Covid was rampant, supply chain delays were a major issue. In fact, in a PwC survey in 2022, a lack of stock was the second most significant roadblock to shopping both online and in stores after inflation. In previous years, a lack of inventory could have been attributed to panic buying and media hype, but this year as brands are more prepared, new concerns have sprung up.
To prepare for possible supply chain issues, retailers started preparing for the holiday season earlier this year by bulking up their stock. However, this is likely to pose a different problem of brands that are left with overstock during and after the holiday season. According to the Bluedots survey, customers are split on overstock issues, with 44% expecting better prices due to high inventory and the same percentage of shoppers still expecting price increases due to inflation.
For retailers and brands, this indicates that retail consumer behavior surrounding the holiday season has changed in that shoppers are more aware of the issues retailers are facing because it directly affects their total spending. To help diminish the burden on the customer, retailers might start offering deals and shipping promotions earlier in the season.
Navigating Consumer Behavior This Holiday Season
Inflation may be scarier to some retailers than the average goblin or ghoul, but by understanding how to adapt your business to emerging trends and by using the right tools, brands can easily navigate these trends and enjoy a successful holiday season.
While there are a number of ways brands and retailers can work to minimize the effects of changing customer behavior, tackling issues on multiple fronts can demand time, effort, and resources that some companies may wish to invest elsewhere. To help with challenges related to shipping, supply chain, and reporting, consider turning to a third party to lighten the load.
Tools such as Cymbio can help brands automate their marketplace maintenance and monitoring, freeing up time to focus on other things, like how to provide your customers with the best value. Cymbio allows you to automate manual order cycle tasks, such as shipping label creation, handling returns and refunds, and real-time inventory tracking. During the hectic holiday season when orders and returns are rolling in and inventory seems to fluctuate by the minute, having a solution like Cymbio on your side can make the difference in helping you meet your targets this year.
Schedule a call with one of our experts today to find out more about how Cymbio can help you reach your holiday goals.